A more effective and efficient dispute resolution mechanism should include ... a domestic equivalent of investor-state dispute settlement, ... .

Investor-state dispute settlement normally grants foreign investors the right to initiate dispute settlement proceedings against a foreign government. NAFTA contains such a provision, as will CETA once it comes into force. In the internal trade context, a domestic equivalent should at least provide businesses access to dispute resolution under the AIT (and could potentially be opened to individuals or other organizations). Currently, businesses and others must first go through their provincial government to resolve disputes under the AIT before initiating a dispute – an unnecessary and burdensome step.

Their general point seems to be that Canadian businesses should not have to go to their provincial government in order to initiate a dispute against another province related to perceived trade barriers. They should be able to enforce domestic free trade on their own, through a private right of action. The report refers to ISDS, and says there should be a domestic equivalent.

Calling for a private right of action makes sense, but is ISDS the best parallel? I would have thought the better comparison would be to the EU treaties or to U.S. constitutional law, where private actors can go directly to domestic courts where barriers exist. Wouldn't constitutionalizing the process be the most effective way to promote the Canadian "single market," the free movement of goods, services, capital, and labor, and free trade generally? Ad hoc trade panels seem less authoritative to me than constitutional courts.

It has been suggested that direct private action is already possible under Canadian constitutional law, at least for trade in goods, although the relevant provision seems to have been interpreted narrowly and may not work here. Does Canada need a separate process for internal trade disputes, or could the existing constitutional system handle these matters? It may need to be tweaked to cover modern trade issues, and provide for broader trade freedoms, but this might be an easier and more effective approach.

On the other hand, maybe legalizing these issues is too much of a challenge. Perhaps it needs to be more of a political process. If the provinces can agree to work together on issues such as mutual recognition, progress can be made; but if they can't, we are stuck with the existing situation.

Here's one example of new thinking he should pursue: The United States should apply to relations with hemispheric neighbors many of the lessons of the European Union and its half-century of economic and political integration. A functioning American Union that pools sovereignty is a goal worth introducing now.

Putting policy aside, and focusing on politics, I beg to differ on this one. In fact, here's some unsolicited advice for Obama: do not ever use the terms "American Union" or "pooling sovereignty" during your campaign or afterwards!

In the Financial Post, some well known trade experts argue for deeper Canada - U.S. integration:

That a big idea on Canada-U.S. trade is needed there is little doubt.

...

"We reached the high point in the year 2000 in volume in terms of trucks and human traffic," Mr. Hart says.

While security concerns since Sept. 11, 2001, have led to a thickening of the border between Canada and the United States, raising costs and creating delays for both goods and people, the main problem is neither country has accepted it needs to move beyond "trade policy" toward a new "integration policy," the experts argue.

From a common security perimeter to common regulation, it is time Canada-U.S. trade grew up. As Europe embraces the concept of mutual recognition of regulations and Asia speeds toward freer trade, the biggest trading relationship in the world is increasingly bogged down.

"Canada and the United States don't really trade with each other any more; they build things together," Mr. Hart says.

The point really hit home during the BSE crisis, Mr. Hart says. A calf may be born in Alberta, but it is sent to Montana to eat grass, back to an Alberta feedlot to get fattened up and on to Chicago to get butchered. That is why tracing the infected meat was so important.

That is also why one North American food standard would make sense.

Mr. Hufbauer argues Canada would benefit from simply adopting large swathes of U.S. regulation.

Mr. Hart points out as the gold standard in drug regulation, U.S. Food and Drug Administration employs 10,000 people and spend billions of dollars vetting drugs. Yet Canada feels it has to employ another 985 people to second-guess the FDA. The result? Drug approval can take years longer, denying Canadians potentially life-saving drugs.

He adds two-thirds of Canadian regulatory standards are not as tough as U.S. standards and carry far lower liability costs. Mr. Hufbauer says common Canadian and U.S. standards could cover at least 90% of the trade in food products.

"After all, 30 million Canadians and Americans eat in the other country during their annual travels," he says.

A new trade integration campaign is badly needed. "This needs political momentum, this needs political leadership, this needs to be put of the top of the Canada-U.S. agenda," Mr. Hart says.

More at the link. I'm not sure what the reaction to these proposals will be. There could be a good deal of concern on both sides of the border. Whether such proposals are at all feasible could depend on the form they take (e.g., binding rules or simple cooperation).